Quote:
Originally posted by Mmmm, Burger (C.J.)
But why do you want to encourge his spending more? If you give Bill Gates a dollar, would you prefer to see him spend it or save it? If he saves it, and it's invested productively, won't that benefit everyone more than if he puts another flat screen TV in his house?
Besides, someone eventually has to spend it. If gates saves it, his kid might go nuts on the spending of his trust. It's not like the savings disappear, never to be taxed again.
Finally, he probably will spend it. Over one's lifetime, spending=income. Well, let's say income-estate, but still. It's just a timing question.
If all it is is a timing question, why not give incentives for savings over consumption that will enhance the strength of the economy by increasing the flow of money to the most productive uses?
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I'm afraid I don't buy the connection between an income tax and an incentive to spend. What's more, except with respect to a very small portion of the middle class, I don't believe that a consumption tax is an incentive to save.
I make a lot of money (well, at least I did before I went into solo practice), and I save(d) as much as I could. But I still bought a new washer and dryer when the old one went on the fritz, and I still put gas in the car, and occasionally took the kids to the movies or Great America. Quite frankly, I couldn't save more no matter what the tax base is.
And as for Bill Gates, he's going to buy the art, take the European vacation, go to the opera, and he will still save millions. Changing to a consumption tax won't affect his spending patterns any more than it will mine.
